The NBA's best free-throwing shooting team made Boston pay for its aggressive play.
Indiana was 24-for-30 from the free-throw line, while Boston was 7-for-12.
Smits was 11-for-15 from the field and made all four of his free throws.
"I'm still mad that I missed three easy shots," said Smits, who played only 28 minutes. "It doesn't matter. We're winning ball games, and that's the bottom line."
"They go to the line quite a bit," Boston coach Rick Pitino said. "I don't usually comment too much about the officiating. Let me just drop it there, I'll stay with my policy."
Antoine Walker led the Celtics with 27 points, but was only 11-of-27 from the field.
"We put ourselves in position to win, but unfortunately came up short," Pitino said. "They got to the foul line. We didn't. Give them credit."
Walker also selected his words carefully when asked about the disparity in free throws.
"You never want to try and blame the officials, but there were a couple of questionable calls at the end," Walker said.
Boston, which lost to the Pacers in Indiana for the ninth consecutive time, fell behind by 12 early in the third quarter. The Celtics then got back in the game with eight consecutive points, including consecutive jumpers on fast breaks by Kenny Anderson.
There were 10 lead changes in the first three quarters, which ended with Indiana holing a 75-72 lead.
Boston took its final lead at 82-81 on a layup by Vitaly Potapenko. Two free throws by Dale Davis and a tip-in by Sam Perkins gave Indiana an 85-82 lead and the game was tied one last time at 86 on a jumper by Tony Battie.
Jalen Rose, who contributed 20 points to the victory, hit a jumper to give Indiana an 88-86 lead.
Walker missed one of two free throws that would have tied the score at 88 with 4:04 left. The teams then exchanged baskets and Travis Best put Indiana ahead 93-87. Potapenko was called for an offensive foul at the other end.
Potapenko's driving layup made it 93-91 with 1:46 left and he was called for his sixth foul with 1:31 remaining. Smits hit both free throws and Battie then made two free throws for Boston, making the score 95-93 with 38.8 seconds left.
Best sank two free throws for Indiana with 21.2 seconds to play and Paul Pierce gave Boston one last hope by completing a three-point play with 11.6 left, reducing Indiana's lead to 97-96.
After a timeout, Indiana got the ball into the hands of Reggie Miller and he was fouled with 10.3 seconds remaining. Last season's NBA free-throw leader who is second this season, made both shots to cap the victory.
"We turned them away when we had to," said Davis, who finished with 11 points and 14 rebounds. "We had to keep pounding the ball to the inside and take advantage of that (inside pressure)."
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